This month, Ernst & Young released a new report, Rapid-Growth Markets Forecast Summer edition 2012, which explores how soaring domestic demand in many developing markets “is poised to change the rules of the world economy.” By 2020, the report says, the number of middle-class households in emerging countries will more than double, overtaking the U.S. and Eurozone with nearly 150 million new consumers. In his coverage for the Financial Times, Andrew Brown writes that foreign direct investment will continue to grow and move towards domestic service sectors.
Roseline Okere also covered the Ernst & Young report in the Guardian News Nigeria, where she notes that Nigeria and Ghana are among the top three fastest growing global markets and that the power sector is one of the keys to Nigeria’s economic growth and development” and that a potential privatization of that country’s power sector could help revive its manufacturing sector.”
OPIC has long recognized the potential of emerging markets and the capabilities U.S. small businesses have to contribute to their development in ways that also contribute to the U.S. economy. In early July, OPIC President and CEO Elizabeth Littlefield spoke with Crain’s New York Business reporter Eilene Zimmerman about small businesses often seeing “a substantial payoff from venturing abroad.”
“Research has shown that small businesses that invest abroad have much higher survival rates and much higher productivity and pay than those that don’t,” Littlefield said.
Recently, Littlefield spoke about the growing importance of emerging, frontier markets to U.S. businesses, which she said are “underrepresented” in the developing world.
Littlefield told Congress, on Wednesday, July 25, that Africa presents extensive investment and development opportunities and described how OPIC supports long-term U.S. investments in Africa through political risk insurance, investment financing, and how every dollar OPIC has invested in emerging markets like Africa, has mobilized another $2.70 in private-sector investment before.
In addition to providing excellent investment opportunities, these investments in emerging markets can also provide needed developmental benefits. While investors are increasingly talking about “impact investing,” the practice is not new to OPIC, which has a 40-year history of transforming private capital into solutions for common social and environmental challenges around the world.
In his piece for the Huffington Post, Ben Thornley dives into the discussion of what impact investing really means, and writes that social or environmental purpose is baked into the DNA of these investments, which aim to achieve a “double bottom line.” Thornley argues that the impact investment sector, a key focus for OPIC, could benefit from and established and universal definition that would help investors understand the vast potential of investing in projects that aim to achieve a financial return as well as a social or environmental benefit. .
In other developments, OPIC was recently honored with two awards in July. The agency’s 2011 deal to provide political risk insurance to Terra Global Capital to support a REDD Carbon Reduction Project, was awarded Environmental Finance magazine’s Award for Sustainable Forestry, which recognizes “excellence in the application of capital markets know-how to addressing the world’s environmental problems.”
Additionally, OPIC extends congratulations to Citigroup for being named the “International Award Winner” by the Business Community Awards. Through a $350 million partnership with OPIC, Citi has developed new financial capabilities which enable new distribution models to access micro-entrepreneurs in developing markets. The micro-entrepreneurs are able to get direct access to smallholder farmers and diversify their supply chain.